If you can look back at your life without spotting any serious financial mistakes then that is a wonderful thing. However, for many of us, it’s been a serious learning curve that has witnessed many huge errors when dealing with our finances.
Sometimes making mistakes with your finances can result in small problems, however, others can snowball, leaving you in a greater mess than you could ever have foreseen.
Credit cards
Looking back, I can’t see any good reason why I owned credit cards. The reality is, if you can’t afford to pay for something you should probably save up for it. However, I made the mistake of taking out more than one credit card, and then using the balance to pay off other debts. A terrible decision that resulted in more debt, higher payments and difficult situation getting a lot worse.
Taking out credit cards is a dangerous game and while you may do it with the plan of moving from one card to another and exploiting the zero interest options that you often get when you first sign up, it is too easy to use them to pay off bills or spend on things you don’t need. If you are very good with your finances you can probably manage without them, and if you are not, can you really afford to take the risk.
Not diversifying my portfolio
If you were investing in the stock market during the financial crisis in 2008, the chances are you were hit somewhere to a certain extent. Sadly, I was too and while I made the effort to diversify a little, I didn’t have a broad enough investment portfolio and my losses weren’t few. While many have recovered a fair bit, I still lost a lot of money as did many other people across the world. This is somewhere where you should definitely learn from your mistakes as the stock market tends to fall and rise based upon expectations and you never know when it could happen again. Now, I have a much broader range of stocks and I hope that should it happen again, my losses won’t be so great.
Burying my head in the sand
This is something I did a lot more when I was younger than I have done in recent years. Ever been at the point where you are scared to answer the door or open the mail? If you have, you are not alone. There are many people in the same situation, sadly, the worst thing you can do is not address financial problems.
The fact is, when you do what I did, which was try and ignore the red letters demanding payment, they just incur more and more charges and they don’t go away. To make matters worse, you end up not being able to obtain credit so options such as low interest loans to consolidate your credit cards, are no longer available. Whenever I have a financial problem that needs addressing now, I deal with it.
Taking sole charge of all of the finances
When I was admitted to hospital several years ago it became apparent, that for a short time, my partner would have to take care of all of our finances. However, it soon became clear, that I had been paying all of the bills and looking after everything for so long, that she didn’t know where to start. It wasn’t paying everything because it was my responsibility. It was more a case of I ran the finances, and my partner ran the business. This brought about several problems such as unpaid bills and direct debits not being paid. It’s never a good idea to have one person in charge of the finances and as such, we always sit down to discuss everything together so that in the eventuality that one of us is rendered unable to do our bit, the other can now take over the smooth running of everything without any problems.
Another positive that has come from discussing our finances together it looking at our shared goals and how best to achieve them. Two heads are often better than one.
Not saving up for a rainy day
This is another mistake I made a lot more as a younger person than I do these days. Living from pay check to pay check meant that I was never in a position where I was prepared for unexpected bills or problems. As I got older, I realized that life isn’t as simple as it first looks and I always put a little something aside just in case. If I had learned this lesson sooner however, life would certainly have been a lot easier during my younger years.
Hindsight
It’s all well and good looking back at your financial mistakes seeing where you went wrong. However, there is no point beating yourself up about the mistakes you have made. It is only through making mistakes and learning harsh lessons that you truly learn how to get things right second time around. Keeping your finances in check is something that takes many of us years to get right and in some cases we are always learning, making improvements and doing things differently.
